Housing Microfinance in South Africa: An Update

With slow economic growth, high house prices and limited access to mortgages, affordability continues to be a problem for the South African housing sector. Housing microfinance (HMF) can help to bridge this gap, allowing households to expand, renovate or incrementally construct their housing with affordable financing. This report provides an overview of South Africa’s HMF sector, charting the opportunities and challenges it faces. HMF can help RDP beneficiaries gradually improve and expand their housing, provide financing for the underserved ‘gap’ market and increase the supply of rental accommodation by financing the construction of backyard rooms. It can also support the government’s efforts at informal settlement upgrading and provide access to financing to those who would otherwise not qualify, such as the self-employed and informally employed. The growth of HMF should be encouraged as it is a form of developmental lending, particularly considering current lending patterns in South Africa. More research, advocacy and support are required for HMF to achieve its potential scale.